Guy: Latin America Business Breakfast

Speech to Latin America Business Breakfast,
Wellington Chamber of Commerce

Good morning,

I
would like to thank the Wellington Chamber of Commerce for
organising this event. This event comes off the back of the
Prime Minister’s trade mission to Latin America, where we
visited four countries over 10 days – Mexico, Colombia,
Chile, and Brazil.

The mission was a great success. Strong
relationships were formed, or strengthened, both at the
political and at the business level.

At the political
level, a highlight was Colombian President Santos publicly
expressing his desire for a Colombian-New Zealand Free Trade
Agreement. On the business front, 139 meetings took place,
this resulted in 49 leads which are likely to lead to new
business.

I’m keen to see continual progress made on
this mission. I am determined to do what I can to help New
Zealand businesses succeed in Latin
America.

Boosting exports

New Zealand
is a small economy that relies on trade. If we are to
increase our living standards, create more jobs and become
more prosperous, then we need to grow our exports.

This is
a key focus for this government. It is why we have set a
very ambitious goal of increasing our exports from 30% of
GDP to 40% by 2025.

It is also why we have a dedicated
work stream under the Business Growth Agenda focused on
building export markets. This work stream consists of a wide
range of projects. There is no silver bullet. We need to do
a lot of things, and we need to do them well.

One of the
key projects underway at the moment is the creation and
delivery of a New Zealand story. New Zealand has a strong
reputation overseas. We need to leverage this reputation and
have a consistent brand story that NZ Inc can take overseas.
We need to articulate what New Zealand is about, and why we
are good to do business with.

Another key project is to
increase the number of Ministerial-led trade missions. Since
July 2012, 28 trade missions have been delivered including
13 Ministerial-led missions. These missions are crucial for
opening doors, strengthening connections, and resolving any
market access issues in a timely manner.

The Prime
Minister has just come back from a very successful China
mission, where New Zealand and China reaffirmed our goal of
increasing two way trade to $20 Billion by 2015. I intend to
follow up on his mission in the middle of the year.

We are
also progressing a number of free trade agreements,
including our most ambitious negotiation to date – The
Trans-Pacific Partnership. This negotiation now involves 13
countries across the Asia-Pacific, with Japan joining over
the weekend.

The TPP is not just about reducing tariffs,
although that will be important. We are committed to a
shared goal of a comprehensive, high-ambition,
next-generation agreement. It is about increasing the
business competitiveness of the region. It also has an end
prize of over $2 Billion.

Last week the Prime Minister
announced that we will be investing an additional $158
million over four years into tourism in Budget 2013.

This
new funding will boost our marketing of New Zealand to the
world, encourage investment, bring more international events
to our shores, simplify visa processes and attract more
high-value tourists.

However, improving our
competitiveness is not just about improving access to
overseas markets. It is also about creating the best
environment here in New Zealand to enable our businesses to
succeed.

In my Primary Industries portfolio the Government
and industry have collectively invested $650 million into
primary sector innovation through the Primary Growth
Partnership.

This $650 million investment is expected to
bring returns to the New Zealand economy in the order of $7
Billion. That is, for every dollar the Government and
Industry put in, we are expecting to see $11
benefit.

Another key feature of my portfolio is investing
in irrigation infrastructure. The drought, and recent
downpours shows that New Zealand doesn’t have a water
shortage issue; we have a water storage issue. The fact that
New Zealand only stores 2% of the annual rainfall
illustrates the potential gains in this area.

That is
why we are investing $400 million to increase irrigation
across 420,000 hectares and unlocking $4 billion of extra
export potential by 2026.

This $400 million investment
will be funded from the Future Investment Fund which
allocates the returns from the Mixed Ownership model.

I
believe that this is a clear example of the way in which
this Government is thinking strategically about investing in
our future. The proceeds from selling 49% of some of our
energy companies will be invested in crucially needed
infrastructure that will support future
generations.

Latin America

I’d like
to make a few observations from the mission to Latin
America.

Firstly, the market opportunities are vast. The
four countries we visited had a combined population of 372
million people, and a combined GDP of US$4 trillion.

They
are also growing, and growing fast. Mexico, Colombia and
Chile are growing on average by around 5% per annum.

This
growth in wealth will mean an increase in demand for the
things that New Zealand produces.

New Zealand is
well-placed to take advantage of these opportunities. We
have a strong brand in Latin America. Their perception of
New Zealand is that we have a transparent and accountable
government; and that we are world leading in providing a
competitive business environment. This is consistently
backed up by our high rankings in global Ease of Doing
Business surveys.

More importantly New Zealand’s brand
in Latin America is one of trust and integrity. In my
opinion it is crucial that we maintain and build upon this
reputation.

There are plenty of opportunities to take
advantage of.

Mexico offers a strategic opportunity into
the USA market, one that a number of New Zealand companies
are already taking up. It is our largest Latin American
trading partner and it is great news that they have joined
the TPP negotiations. This now means that three Latin
American countries are involved in the
negotiations.

Colombia is a vastly different place to what
it once was. Its security situation is improving. It has a
young and highly educated population, has great resource
potential, and is focused on becoming an economy that
welcomes investment and is business friendly. Analysts also
say that it is on track to become South America’s
2ndlargest economy.

I view our relationship with Chile as
one of cousins, and we can build on this relationship. I see
great opportunities to collaborate in the agricultural,
education and natural resource sectors. Chile is also
realising that it needs to invest in better water storage
infrastructure, and has been investing heavily in geothermal
energy.

Brazil is not an easy place to do business, but is
has amazing potential. It is has a global GDP ranking of
7th, and is projected to increase to 5th. There are a number
of New Zealand companies doing business in Brazil, and New
Zealand investment in Brazil has reached $NZ350
million.

Conclusion

New Zealand has
historical links with Europe and North America. Over the
last ten years we have come to realise that Asia is on our
door step and offers huge opportunities. I believe the time
has come for New Zealand to look across the other side of
the Pacific to the awakening Latin American
Giant.

Globalisation has changed where New Zealand sits in
the world. We are firmly in the centre of the hub of global
activity – The Asia-Pacific. And we need to make the most
of this opportunity.

As a government we are here to
support businesses who are looking to export. Whether it is
providing a competitive business environment, reducing
export barriers, or through the work done by New Zealand
Trade and Enterprise and the Ministry of Foreign Affairs and
Trade.

But the government can only do so much. It is
businesses that grow exports, not the government. The
businesses who came on the mission were chosen because they
had done business in Latin America, and were looking to
expand. There are representatives from these businesses in
the room. I encourage you all to make the most of these
contacts.

I look forward to hearing about the continued
progress of New Zealand businesses in Latin America.

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